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If you're an e-commerce company, the people who buy stuff on your site are important. But they're not the only customers who matter.
Increasingly, it's the people who sell stuff on your site whose loyalty you want to cultivate. You might say one is silver and the other gold.
The latest gambit in the contest for third-party love comes from eBay. Just as Amazon grapples with possible defections by disgruntled sellers, eBay has announced a new, simplified fee structure that takes direct aim at its larger rival.
I'll be the first to admit that the very phrase "fee structures" is enough to cure insomnia. And it's even worse when the calculus for charging sellers what amounts to a commission is deeply confusing, as eBay's was for many years. Let's just say that before the switch, eBay charged different percentages based not just on what category of merchandise was being sold but also on the sale price. The new fees are based only on category for higher-volume sellers, or a flat 10 percent rate for lower-volume sellers.
All but the biggest sellers will also likely pay less to list their items on eBay under the new rules.
"These updates are a part of an ongoing effort to reduce the basic upfront cost of selling on eBay for all sellers," eBay says, "and to make it easier for sellers to see at a glance what it costs to sell."
The ability to see sales costs "at a glance" isn't just a gesture made out of pure user-friendliness, however. EBay wants sellers to see how much they'll pay selling on eBay versus selling on Amazon, a point eBay makes explicit in this table comparing the two companies' fees.
By eBay's own estimation, it's offering a much better deal than Amazon. Among the caveats, however, is the warning that eBay's rates don't include the percentage charged by PayPal as a payment fee. Amazon has already built payment fees into its rates, says Scot Wingo, CEO of ChannelAdvisor, which makes software that analyzes third-party sales on sites such as eBay and Amazon (and which counts eBay among its backers).
Suddenly eBay isn't looking so much cheaper. And Wingo says eBay's fees are still more complicated than Amazon's, though not nearly as much as before. Still, he says they signify a company taking yet another step forward to redefine itself as Amazon's foremost online competitor following a recent redesign meant to lay to rest for good the idea of eBay as a place mainly to buy used stuff at auction. EBay wants buyers to think of the company the same way they think of Amazon — the first place to buy anything. And they want sellers to think the same way about eBay and selling.
"This is part of their new aggressive stance," Wingo says.
But why are sellers so important? Doesn't who's buying matter more than who's selling? For eBay right now, sellers turn out to matter more than ever. Because just as eBay is trying to be more like Amazon, Amazon is trying to be more like eBay. Well over one-third of what Amazon sells isn't actually being sold by Amazon, and the rate keeps growing. Many analysts suspect that Amazon makes higher margins on the sale of other people's inventory than on its own.
It's in this sense that third-party sellers are Amazon's most important customers. The commission Amazon makes off the seller likely means more profit than the money you the consumer fork over directly. The more of these sellers eBay can poach, the more pain they can inflict, especially if Amazon's sellers are starting to grumble. It's highly unlikely eBay rushed its announcement of the fee changes to capitalize on this reported disaffection.
Nevertheless, says Wingo, "they've been somewhat lucky in the timing working out for them."
